Comments on: Don’t Rollover Your 401K

By: rosette

rosette — Fri, 05 Jun 2009 18:08:30 +0000

the problem with not rolling the money over is that if your former employer changes places where your funds currently are…..

I am currently having a minimum issue with some of my former employer 401k which is why I haven’t rolled it out into a traditional IRA…

By: Anonymous

Anonymous — Tue, 27 Jan 2009 02:36:35 +0000

I work with 401k’s. I would say 90%> makes sense to rollover 401k to an IRA. The “active” managed investment choices the article describes try to get a prospectus on these funds, they are not required to disclose to the SEC what they are investing in. Lets put it this way I like to know where my money is being invested. Only few reasons a 401k makes sense:

1. Looking for loan and you are not 59 1/2 years old.

2. Age 55 rules

3. GICs(guaranteed investment contracts).
-tend to yield high rate then money market.
-taking a little more risk then money market.

If these reasons is not what you looking for probably would make sense to rollover.

By: Randel

Randel — Tue, 21 Oct 2008 18:24:33 +0000

It’s that ok if I pull out or close my account on my 401K?

By: Danny

Danny — Wed, 02 Jul 2008 19:38:04 +0000

Good advice. I have 4 different 401(k) accounts that I have left at previous employers. They’re all doing great. Another point – If you roll over your 401(k) into a subsequent employer’s plan, you retain the ability of borrowing against these funds. Now many will argue that it’s never good to borrow against your 401(k), but at least you have the option. Roll it into an IRA, and you lose that option. Also, if you want to retire at 55, you can begin making withdrawals from a 401(k) without the 10% penalty. Roll it over into an IRA and you have to wait until you are 59 1/2 to withdraw the money penalty-free.

By: Anonymous

Anonymous — Tue, 15 Jan 2008 21:04:13 +0000

MY HUSBAND DIED 2 YEARS AGO .. HE HAS A 401K FROM HIS COMPANY THAT I PUT IN MY NAME… I AM ONLY 55 YEARS OLD AND I KNOW THAT I CAN’T USE ANY OF IT .. I WOULD LIKE TO KEEP IT SOMEWHERE THAT I WOULD NOT EVER LOOSE ON .. THAT I WOULD HAVE THIS WHEN I RETIRE
WHAT SHOULD I DO

By: Scott Brooks

Scott Brooks — Mon, 03 Dec 2007 01:45:04 +0000

Dianne,

There are several financial advisors which work on a hourly or fee-basis.
Have you researched the fees your mutual funds charge inside the 401k plan?
$60 on $200K seems very unlikely. I would bet you are paying well over $1000 per year.

I would search out an advisor who does more than sell commission based funds.

Steve,

You are right money management is not medicine. I am sure you would not perform surgery on yourself. Most people fail investing their own money because investors love to chase top performing investments. If I had a $5 bill for every Fidelity IRA I have seen that was destroyed by the tech bubble I would be a very rich man.

By: Dianne P.

Dianne P. — Sat, 05 May 2007 04:13:44 +0000

I really appreciate this information. My 401K is with a huge company. It’s practically doubled since I left the Company four years ago. (from $100,000 to 200,000) I’m being bombarded by banks, Brokers and so forth telling me I should roll it to an IRA. What bothers me is the Fees. 5% off the top for Sales seems excessive. Then there’s the regular fees. My 401K fees for the past year have been less than $60! I’m not comfortable making a move like this at this time. It doesn’t make sense. Thanks.

By: Steve Austin

Steve Austin — Sun, 29 Apr 2007 23:40:46 +0000

Forget the professionals; no one cares more about your money than you do, and professionals have a vested interest in convincing you that things are not as simple as they sometimes seem. Research the factors and do it yourself. Money management isn’t law or medicine.

By: EA

EA — Tue, 24 Apr 2007 21:20:26 +0000

I’ve done both…I have a rollover IRA from a company that was purchased (and the 401k dissolved, so I had little choice) and a 401k from another company that I’m keeping because the fees were non-existant. I recently moved the rollover IRA to Vanguard, and may roll the 401k there as well.

Up until now the company has been covering some of the fees, making it a good place to keep my money, but they are changing fund companies and the rumor is that there will be fees of at least 1% for the managed funds. If that’s true, I’m moving to Vanguard. It would give me more money in one place to allow me to diversify without the low balance fees, and would be easier to have everything in one place.

By: Wanda

Wanda — Tue, 24 Apr 2007 07:29:04 +0000

I think there are also legal benefits to keeping your money in an 401(k). I think that 401(k) money is protected from litigation, whereas IRA money is not. That would be something of concern for people such as surgeons, etc.

But as always, check with your lawyer if that’s something you’re worried about.

By: thc

thc — Tue, 24 Apr 2007 04:55:01 +0000

This is a great post because it points out that there are no simple answers to financial planning questions. Every situation is different and there are no pat answers. The disagreement among previous responses from people who think they know something is proof that things are not as simple as they sometimes seem. Seek professional advice.

By: Chris

Chris — Tue, 24 Apr 2007 02:04:44 +0000

I like Devil’s Advocate posts! Anyway, I do think that an IRA is a preferable rollover destination for a 401(k). I feel no need to put old 401(k) money at a new job. I would rather have the money in an IRA so I can buy stocks.

By: Mike

Mike — Mon, 23 Apr 2007 20:29:14 +0000

This was an extremely rude reply by someone who has no concept of the vein of these posts, nor did he fully read this post. Keep up the good work, Jim, and I look forward to more of these posts. They help the reader look at the flip side of conventional wisdom in order to help reinforce or debunk what is taken as “rule”, in order to help make the best decision for one’s individual situation, for which no 2 are alike.

By: dong

dong — Mon, 23 Apr 2007 18:45:32 +0000

I think if you can it’s actually better to rollover into a current 401k. From an organizational perspective it’s easier and I think makes alot of sense especially if you’re rolling over a small amount. Of course this assumes that your current 401k plan is OK. Also because of the way Roth IRA’s rollover’s work, there’s a good chance you do may not want money sitting in a tax deductible rollover account if at later date you want to rollover a non-deducitle IRA.

By: wanzman

wanzman — Mon, 23 Apr 2007 17:25:11 +0000

I don’t think William quite understands the whole “Devil’s Advocate” thing…